Daily Market Review 11/09/2013

A week of gains for world stocks has come to an end today, while a sell-off in oil and core government debt eased, as talks began on trying to avert a U.S. military strike on Syria.

The safe-haven yen has struck a seven-week low against the dollar and stood near multi-year lows against the euro and pound, while shares in Europe inched lower in early deals after indexes across most of Asia had finished the day flat.

U.S. President Barack Obama said late yesterday that Russia’s offer to push Syrian President Bashar al-Assad to put chemical weapons under international control could potentially avert military action which the U.S. had been considering pursuing.

Markets are mostly in consolidation mode after substantial shifts over two previous sessions when what looked to be a rapid move towards U.S. action was halted by Russia’s plan.

In Europe, Britain’s jobs data will be in focus amid signs its economy is on the rebound. The report had not been released at the time of writing, however the it was expected that the data would indicate a slight increase in job numbers and employment.

The FTSEurofirst 300 pan-European share index remains virtually unchanged after an early trading rush, as a 0.1 percent rise on Germany’s Dax balanced falls of 0.1 and 0.3 percent on London’s FTSE and Paris’s CAC 40. The region’s core debt markets also saw a subdued start as this week’s save-haven sell-off abated. Benchmark German government bonds tracked minor gains by U.S. Treasuries, though UK assets inched back ahead of the jobs data and focus remained on Italy after its benchmark yields rose above Spain’s for the first time in a year and a half yesterday.

Political instability and worries about Italy’s banks ahead of a major health check of all Euro Zone banks by the European Central Bank in the coming months are driving the move. Rome will sell up to 11.5 billion euros of treasury bills later, ahead of a tripartite bond auction tomorrow which aims to raise 7.5 billion.

In the U.S., stock futures pointed to subdued trader sentiment on Wall Street after the S&P 500 gained for the sixth straight day.

In currencies, the dollar struck a seven-week high of 100.55 yen, while the euro briefly reached a 16-week high around 133.37.

MSCI’s broadest index of Asia-Pacific shares outside Japan has ended 0.1 percent lower but remained at a three-month high having gained more than 8 percent in the last two weeks.

In commodities, oil has recovered ground with Brent crude coming up to $111.72 a barrel from a 2-1/2-week low of $110.59. The steadier performance came after a 4-percent drop in the past two sessions. Copper has moved up to $7,185.50 a tonne, whilst gold clawed back to $1,364.50 having slid to a three-week low of $1,356.85 an ounce.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 10/09/2013

World shares have soared to a near one-month high, while oil and government bonds slipped, helped by receding expectations of U.S.-led military action against Syria and after positive Chinese data.

Riskier assets saw a strong resurgence in Europe after Monday’s comments from U.S. President Barack Obama that Russia’s plan to put Syrian chemical weapons under international control could be a breakthrough in the crisis. This was supported by optimistic industrial and retail figures out of China,

Asian shares have closed at a 3-month high, with positive sentiment continuing in Europe where early gains of 0.6 – 1 percent on London’s FTSE, Germany’s Dax and Paris’s CAC 40 pushed the FTSEurofirst 300 up 0.6 percent.

Oil fell to $113 a barrel, its lowest in two weeks, while safe-haven U.S. and German government bonds and gold and other precious metals were also on the back foot.

Russia’s proposal to work with Damascus to put its chemical weapons under international control could avert planned U.S. action, although Obama said he will still continue efforts to convince politicians to back military action.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1 percent, extending yesterday’s 1.3 percent gain to reach highs not seen since early June, while Tokyo’s Nikkei closed 1.5 percent higher, adding to Monday’s 2.5 percent rally as news that Tokyo had won the right to host the 2020 Olympic Games helped support trader sentiment. Upbeat Chinese industrial output and retail sales data on today has also added to growing evidence that its recent economic slowdown may have bottomed out. A run of encouraging factory activity data from China, Europe and the United States has suggested the global economy as a whole is gaining a firmer footing.

After a run of bad luck for hard-hit emerging markets, those markets have continued to find support from last week’s disappointing U.S. jobs data which has added to the debate surrounding the Federal Reserve’s plans to scale back stimulus. The MSCI emerging equities index was at a three-month high as the day’s 1.1 percent rise took its rally over the last nine trading sessions to almost 9 percent.

In currencies, the downgrading of hostility in the Middle East and better than anticipated data out of China have helped the dollar shrug off some of its recent sluggishness, though it remained near a 1-1/2 week low against a basket of major currencies, having fallen 1 percent since the close of trade last week. The euro also continued to recover following a mild selloff last week. The common currency was steady at $1.3255, keeping close to a 1-1/2 week peak of $1.3281 yesterday. The dollar held better against the yen, which sagged on Monday as the Nikkei rallied. 

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 09/09/2013

Positive Chinese trade and inflation data has pushed Chinese shares to three-month highs and boosted regional shares today, whilst Japanese shares rallied and the yen dropped after Tokyo won in its bid to host the 2020 Olympic Games.

The U.S. dollar sank while U.S. debt yields were off two-year highs after a disappointing U.S. jobs report at the close of last week, which has raised speculation the Federal Reserve may minimize the size of a likely reduction in stimulus many investors expect later this month.

European shares were expected to open slightly firmer, today with both Germany’s DAX and Britain’s FTSE seen rising about 0.1 percent. However, concerns about U.S. intentions to strike Syria over its alleged use of chemical weapons could cap the gains.

In Asia, Mainland Chinese shares surged after Chinese August inflation data added to optimism following solid trade figures published yesterday. The CSI300 index of the leading Shanghai and Shenzhen A-share listings jumped 3.4 percent, hitting its highest level since early June. Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9 percent, with both Hong Kong’s Hang Seng Index and Seoul’s Kospi hitting their highest level in about three months.

According to reports released today, China’s exports grew 7.2 percent last month, above market expectations of a 6.0 percent rise from a year earlier. That was followed by data showing consumer inflation held steady in August while producer price deflation continued to ease, another sign of a stabilizing economy.

Investors are bracing for more data from China including industrial production and retail sales tomorrow. Japan’s Nikkei share average gained 2.5 percent, hitting a one-month high as traders bet that hosting the Olympics would boost the economy by 3 trillion yen over the coming seven years.

In the U.S., investors are also grappling with worries that withdrawal of the Fed’s stimulus could destabilize asset prices worldwide. Despite soft job data, most U.S. primary dealers expect the Fed to announce at its next policy meeting September 17 and 18 that it will cut the extent of its bond purchases. Others think the Fed could trim its monthly bond buying from the current $85 billion to an even more modest $5 billion.

In the currency markets, the dollar index currently stands at 82.25, steadying after Friday’s 0.6 percent fall. The euro was buying $1.3175, off Friday’s seven-week low of $1.31045. Against the yen, the dollar briefly rose to as high as 100.11 yen thanks largely to its strong correlation to Japanese shares, but quickly gave up gains on profit-taking to stand at 99.65 yen for a gain of 0.5 percent from late last week.

U.S. crude oil futures slipped slightly but stayed near two-year highs owing to ongoing uncertainty regarding U.S. intentions in the Middle East.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 06/09/2013

Asian stocks remain hesitant, while the U.S. dollar is the prime mover in trade today, as investors wait with bated breath for a crucial U.S. jobs report that could cement the case for the Federal Reserve to begin scaling back its stimulus later this month.

Underlining expectations for an imminent turn in Fed policy, the euro held near a seven-week low on the back of dovish comments from the European Central Bank.

European shares were expected to open modestly lower, with Britain’s FTSE 100 seen down as much as 0.2 percent and Germany’s DAX down 0.1 percent, according to financial bookmakers.

MSCI’s broadest index of Asia-Pacific shares outside Japan was steady after six days of gains – its longest winning streak since December.

Tokyo’s benchmark Nikkei has shed 1.4 percent as traders locked in profit after a sharp rally in real estate and construction firms on hopes the city will win its 2020 Olympic Games bid this weekend. The index was still up 3.5 percent this week.

The euro languished at $1.3131, having slid one U.S. cent to be 0.7 percent lower on the week. Traders moved to dump common currency after the ECB said it stood ready to act if needed to bring money market rates down and help nurture a “very, very green” recovery. ECB President Mario Draghi made those comments as global government bond yields have risen sharply, tracking U.S. Treasuries in expectations for the Fed to start withdrawing its domestic stimulus program.

The dollar index steadied near a seven-week peak but the greenback dipped 0.3 percent to 99.77 yen after it struck above 100 yen overnight to levels not seen since late July. The most recent U.S. data available showed a solid expansion in the services sector, while private employers added 176,000 jobs in August, suggesting that non-farm payrolls could be surprisingly strong.

Some analysts said payrolls in line with expectations of 180,000 new jobs would likely be enough for the Fed to start tapering its $85 billion-a-month stimulus at the Sept 17-18 meeting.

Elsewhere, the Indian rupee slipped 0.1 percent to 66.06 per dollar. It hit a record low of 68.80 last week, The top five emerging market powers, Russia, India, China and South Africa (BRICS), have also pledged to set up a $100 billion fund to stabilize currency markets. However, it looked unlikely to be in place soon enough to temper the effects of an expected pullback of Fed stimulus.

The Group of 20 emerging and developed powers gathered in St. Petersburg for a summit struggled to find common ground over the turmoil faced by emerging markets. Leaders at the summit also had to contend with the tough question of whether to support U.S. military strikes in Syria.

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 05/09/2013

European government bond yields are approaching 18 month highs today, while the U.S. dollar has clung close to six week peaks on a combination of a better global economic outlook, traders feeling skittish about the Middle East, and pending central bank meetings.

Russia and China have both warned the U.S. ahead of the G20 meeting in St Petersburg that the end of the Federal Reserve’s bond-buying program could have a profound impact on the global economy.

The European Central Bank and Bank of England are both expected to leave interest rates unchanged, but traders are looking for statements reiterating pledges to keep rates low given recent stronger economic data.

European money market rates have been moving higher recently in response to stronger economic data and on expectations the Federal Reserve is set to begin the rollback of its domestic stimulus program, possibly as soon as later this month. Analysts see little options for the bank other than just maintaining a soft tone in communication, sending German 10-year bond yields have risen to 18 month highs of 1.981 percent.

The Bank of Japan  has voted unanimously to maintain its monetary stimulus, while declaring the world’s third-largest economy was on a recovery path, sending the yen briefly above 100 to the dollar, a six week low.

In emerging markets, India’s new central bank chief began his tenure in surprising fashion by unveiling measures to support the currency and the banking sector that sent the main NSE share index up 3.3 percent and boosting the rupee, rising to as high as 65.53 per U.S. dollar, pulling well away from a record low around 68.85 set last week.

European share markets are up 0.5 percent in early trade, gaining ground for the second day in a row and hitting its highest level since August 27.

The euro last traded at $1.3185, down slightly against the stronger dollar and not far from a six-week low of $1.3138.

Markets remaim cautious about Syria as a possible U.S. military strike moved one step closer after a Senate committee voted in favor of action, clearing the way for a vote in the full Senate, likely next week. The possible military strike against Syria in reaction to its alleged use of chemical weapons and the Fed’s decision to reduce its stimulus are expected to dominate discussions at a meeting of leaders from the Group of 20 developed and developing economies in St Petersburg.

Owing to instablility continuing in the Middle East, Brent Crude has lifted 56 cents to $115.47, while U.S. oil is up 64 cents to $107.97.

 

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.

Daily Market Review 04/09/2013

Asian stocks broke a four-day winning streak today, while safe-haven commodities such as gold consolidated overnight gains as U.S. lawmakers’ growing support for action against

Syria limited traders’ pursuit of riskier assets.

It was predicted that European markets would follow Asia’s lead with traders expecting Britain’s FTSE 100 to open flat, Germany’s DAX to open up by 0.1 percent, and France’s CAC 40 to open up by 0.2 percent.

The U.S. dollar has held its ground, on course for its best five-day performance in two months, as stronger-than-expected U.S. data helped lift the dollar further.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose from the day’s lows but remained slightly in the red after four days of gains.

Japan’s Nikkei has recouped early losses and rose to a new three-week high. The Nikkei ended up 0.5 percent at 14,053.87, its highest closing since August 14. The index has surged 35 percent this year, but remains 12 percent below its May peak.

The market’s appetite for risk is palpably weak after key U.S. congressional leaders supported military action in Syria. Their stance suggested that the vote could pass in Congress when legislators return to Washington on September 9.

The increased sense of urgency pushed down benchmark 10-year U.S. treasury yields to 2.86 percent from overnight highs, despite a U.S. manufacturing index beating forecasts and setting a stronger tone for Friday’s non-farm payrolls.

In emerging markets in Asia, India and Indonesia have been singled out by investors for punishment due to their reliance on capital inflows to paper over widening deficits, while elsewhere in Asia, the Korean won punched above a 200-day moving average, a key technical level, against the U.S. dollar.

In the currency market, the U.S. dollar’s strength saw the euro slide to a six-week low of $1.3138, although it has since managed to edge up to $1.3170. Both the dollar and euro held onto limited gains on the yen, but stand to quickly lose them if geopolitical risk flares up once more.

The Australian dollar was boosted by data showing the economy grew 0.6 percent in the second quarter. The AUD built on Tuesday’s gains after the Reserve Bank of Australia gave no indication that it would cut its cash rate in the immediate term.

In commodities, oil and gold rose. Crude reached $108.29 a barrel, having jumped nearly 1 percent on Tuesday. Spot gold traded at $1,412.95 an ounce following a 1.3 percent rally.

 

Disclaimer: The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.